ACG2021 Ch 4 Practice Quiz (TCC)

Which account below is a permanent account?

d. Deferred Revenue

Which of the following steps is performed last at the end of the year?

d. Prepare a post-closing trial balance.

Accumulated Depreciation appears on the:

d. balance sheet as a contra-asset account.

Adjusting entries affect:

d. both income statement and balance sheet accounts.

When a deferral adjustment is made to a liability account, that liability becomes a(n):

d. revenue.

The balance of which of the following accounts appears in the credit column of an adjusted trial balance?

a. Common Stock

A company started the year with $3,750 of supplies on hand. During the year the company purchased additional supplies of $2,000 and recorded them as an increase to the supplies asset. At the end of the year the company determined that only $750 of supplies are still on hand. What is the adjusting journal entry to be made at the end of the period?

a. Debit Supplies Expense and credit Supplies for $5,000 Supplies expense (used) = Beginning balance + Supplies purchased − Supplies on hand at end of period= $3,750 + $2,000 − $750 = $5,000The adjusting journal entry to record the use of supplies would include a debit to Supplies Expense and a credit to Supplies for $5,000, which is the amount of supplies used during the period.

Which of the following statements about an adjusted trial balance is correct?

a. It is used to prepare financial statements.

The adjusting entry to record services earned but not yet billed requires:

a. a debit to Accounts Receivable and credit to Service Revenue.

The balance in the Prepaid Insurance account after the adjusting entries have been recorded represents the:

a. amount of the insurance prepayment that remains to benefit future periods.

Before the closing entries are prepared, the Retained Earnings balance in the adjusted trial balance is equal to the balance of that account:

a. at the beginning of the period.

In the closing process, expenses and dividends are zeroed out by _______ each account and revenues are zeroed out by _______ each account.

a. crediting; debiting

First Corporation had Retained Earnings at the end of December 31, 2018 of $900,000. During 2019, the company had net income of $340,000 and declared dividends of $40,000. The amount of Retained Earnings reported on the balance sheet as of December 31, 2019 will be:

b. $1,200,000. Ending retained earnings = Beginning retained earnings + Net income − Dividends= $900,000 + $340,000 − $40,000 = $1,200,000

The adjusting entry to record interest owed on obligations at the end of the accounting period includes a debit to:

b. Interest Expense and credit to Interest Payable.

If an expense has been incurred but will be paid later, then:

b. a liability account is created or increased and an expense is recorded.

Sail, Inc. pays its workforce on Fridays for a five-day workweek ending on that day. The payroll for a week is $165,000. If the accounting year-end falls on a Tuesday, the adjusting journal entry to record this will include a

b. debit to Salaries and Wages Expense $66,000. The adjusting entry would include a debit to Salaries and Wages Expense and a credit to Salaries and Wages Payable for $66,000 [or ($165,000 ÷ 5 days) × 2 days].

At the end of the accounting period:

b. temporary accounts are closed; c. permanent accounts are not.

Which of the following trial balances is used as a source for preparing the income statement?

c. Adjusted trial balance

Which of the following statements about adjusting entries is not correct?

c. Adjusting entries often affect the cash account.

Angela is a tenant of Bruce. On March 1, Angela paid Bruce $2,400 for 3 months of rent. On March 31, Angela's adjusting entries will include one with a debit to:

c. Rent Expense for $800 and a credit to Prepaid Rent for $800. When Angela first made the payment, it provided an economic resource to the company (building space for three months), so it was initially recorded as an asset called Prepaid Rent. At March 31, one month has passed. The adjusting entry will include a debit to Rent Expense (to increase this expense account) and a credit to Prepaid Rent (to decrease this asset account) for $800 [or ($2,400 ÷ 3 months) × 1 month].

What is the purpose of the closing process?

c. To prepare the accounting records so they are ready to track results for the following year.

If certain assets are partially used up during the accounting period, then:

c. an asset account is decreased and an expense is recorded.

Closing entries:

c. cause the revenue and expense accounts to have zero balances.

A contra-account:

c. offsets, or reduces, another account.

Closing journal entries:

c. transfer net income (or loss) and Dividends to Retained Earnings.